PacWest Bancorp (NASDAQ:PACW) shares rose another 32% in pre-open trading Monday after the company slashed its dividend and said the business "remains fundamentally sound."
The L.A.-based bank declared a quarterly dividend of $0.01 per common share, down from its prior dividend of $0.25 per common share - a decrease of 96%.
PacWest Bancorp said the dividend cut will help accelerate plans to build capital to CET1 of 10%+.
Paul Taylor, president and CEO, commented, “Given current economic uncertainty, recent volatility in the banking sector and potential changes in regulatory capital requirements, we view reducing the dividend as a prudent step to accelerate our plans to build capital to CET1 of 10%+. Our business remains fundamentally sound, and we will continue with our strategy to focus on our relationship-based community banking model.”
Today's early jump followed Friday's 82% surge off the lows. Shares remain down 75% year-to-date as of Friday's closing price.
The entire regional banking sector has been brutalized amid worries of contagion after the collapse so far this year of SVB, Signature Bank, and First Republic Bank.
The news is also helping regional banking peers like Western Alliance Bancorporation (NYSE:WAL) (+7.8%), and Zions Bancorporation (NASDAQ:ZION) (+3.8%).